Lost, forgotten, or dead: Is Bitcoin even scarcer than imagined?
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Lost, forgotten, or dead: Is Bitcoin even scarcer than imagined?
Satoshi's prophecy is coming true: these lost coins are actually a donation to all holders, making the remaining bitcoins rarer and more valuable.
Navigating Web3 tides with focused insightsBy Long Yue, Wall Street Insights
The maximum supply of bitcoin is capped at 21 million coins, but the truly available circulating amount may be significantly lower.
Recently, according to tracking by data firm "Sound Money Report" and multiple on-chain analysis reports, an estimated 2.3 million to 7.8 million bitcoins may have permanently exited circulation due to lost private keys, damaged hard drives, or owners' unexpected deaths. This implies that out of the current circulating supply of approximately 19.9 million bitcoins, the effective amount could be as low as 12.1 to 17.6 million.
Satoshi Nakamoto, bitcoin's creator, predicted in April 2010 on the BitcoinTalk forum: "Lost coins only make everyone else's coins a little more valuable. Think of it as a donation to everyone." Today, this comment made over a decade ago is becoming reality on an unprecedented scale.
Irretrievable Digital Wealth
Unlike traditional assets such as stocks or bonds, there is no "lost-and-found" mechanism in the world of bitcoin. The well-known maxim in the crypto world—"Not your keys, not your coins"—often becomes harshly real as "No keys, no coins."
Once the private key—a unique 256-bit password—is lost, the corresponding bitcoins become visible on the blockchain but forever inaccessible "ghost assets." Such cases are common, for example:
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It was reported that Welsh IT engineer James Howells accidentally discarded a hard drive containing private keys for 8,000 bitcoins in 2013; the asset is now worth nearly $900 million.
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Former Ripple CTO Stefan Thomas forgot the password to an encrypted hard drive holding 7,002 bitcoins and, with only two of ten attempts remaining, found himself in endless despair.
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There are also cases where massive wealth was taken away by accidental death. Gerald Cotten, CEO of Canadian cryptocurrency exchange QuadrigaCX, reportedly died in 2018, rendering $190 million in customer funds—including large amounts of bitcoin—inaccessible.
Data compiled by Sound Money Report indicates estimates for permanently lost bitcoins range between 2.3 million and 7.8 million.
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A May 2025 report from Ledger cited analyst estimates suggesting between 2.3 million and 3.7 million bitcoins have been lost, accounting for roughly 11%-18% of total supply.
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Tiny Island Digital analyst Timothy Peterson estimated in a June 2025 report that over 6 million BTC are irrecoverable.
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A 2023 study by blockchain analytics platform Glassnode and ARK Invest estimated about 7.8 million BTC are in a state of "hoarded or lost," though this figure might be inflated due to including long-dormant "hodling" addresses, representing around 39% of total supply (as of September 8, 2025, approximately 19.9 million bitcoins had been mined).
Despite differences in methodology, these figures point collectively to one fact: a large and growing pool of permanently lost bitcoins exists.
Invisible "Supply Shock": Underestimated Scarcity
The "invisible supply shock" caused by lost bitcoins is far larger in scale than the much-discussed institutional adoption.
Data as of August 2025 shows that all spot bitcoin ETFs combined hold about 1.036 million bitcoins. According to Bitcoin Treasuries, the top 100 publicly listed companies globally hold approximately 988,000 bitcoins, with several other well-known firms holding partial amounts. Combined holdings of ETFs and corporations amount to roughly 2.2 million bitcoins.
This means that even using the most conservative estimate of 2.3 million lost coins, the number of bitcoins permanently removed from circulation already exceeds the total held by Wall Street and global corporate giants.
While market attention remains focused on how much capital flows into BlackRock's IBIT fund or how many more bitcoins MicroStrategy has acquired, a far larger and more impactful supply contraction is quietly unfolding.
Bitcoin’s True Market Cap May Be Overstated by ~$500 Billion
Based on the current 19.9 million mined bitcoins, subtracting a median estimate of 5 million lost coins, 2.2 million held by institutions, and assuming long-term individual investors ("hodlers") hold about 3.8 million, the resulting freely tradable float may be only 8.9 million bitcoins—approximately 45% of total mined supply. In contrast, free float ratios for S&P 500 constituents typically range between 70% and 90%.
Therefore, the widely reported total market cap of bitcoin exceeding $2.1 trillion actually includes an illusion. If we exclude 5 million "ghost bitcoins," its true market cap should be around $1.6 trillion—vanishing roughly $500 billion overnight.
In short, bitcoin's scarcity far exceeds its paper limit of 21 million. This "silent deflation," driven by loss, forgetfulness, and death, continuously reduces bitcoin's actual supply—an effect whose scale and impact go far beyond the scope of mainstream financial media coverage.
The market is gradually realizing it is "scarcer than imagined."
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